Conn. tax breaks seen as lure for airport business

STEPHEN SINGER, AP Business Writer

Published 12:00 am, Monday, May 17, 2010

WINDSOR LOCKS (AP) -- Connecticut will soon begin a new marketing drive to attract businesses to Bradley International Airport to reverse what many say has been a poor track record promoting economic development.

It's the next step now that the General Assembly has passed legislation offering tax incentives to draw manufacturing, warehouse and other businesses to the airport's surrounding area dotted by farms, suburban tract housing and small shopping centers.

Bradley, which serves central Connecticut and western Massachusetts, completed a multimillion dollar expansion in 2003 with construction of a terminal and concourse. Backers promote it as a more accessible alternative for New England travelers than Logan International Airport in Boston or New York's Kennedy and LaGuardia airports.

Still, economic development officials and politicians say the airport has yet to achieve its potential.

"It's stagnant," said Sen. Gary LeBeau, Senate chairman of the General Assembly's Commerce Committee. "It's not been the kind of development we'd like to see. It should be an engine of economic growth."

Eric Brown, a lobbyist for the Connecticut Business and Industry Association, said the airport, a state operation run by the Department of Transportation, is hobbled by an inability to move quickly and nimbly in the airline and aerospace industries.

"We feel it has tremendous more potential to generate economic activity, not only for Connecticut but for the southern New England region," he said.

The legislation, which heads to Gov. M. Jodi Rell for her signature, establishes the Bradley Development Zone in the towns of East Granby, Suffield, Windsor and Windsor Locks. Beginning in 2012, new, renovated or expanded buildings in the towns are eligible for property tax exemptions equal to 80 percent of the assessed value of improvements for five years.

Exemptions of 80 percent also will be available on the assessed value of machinery and equipment installed as part of developing or acquiring a building for a business.

The state will reimburse municipalities in the development zone for half the property tax revenue forfeited because of the exemption.

In addition, businesses that qualify for property tax exemptions also are eligible for a 10-year corporation business tax credit beginning in 2013.

The incentives are modest, but provide the four towns, Bradley and state officials with a new tool to attract business, said Gary Haynes, director of community development in East Granby.

"I think it's a good first step," he said.

Patrick McMahon, Suffield's economic development director, said a consortium of the four towns markets properties around the airport. Reimbursements from the state should make that work easier, he said.

Bradley has been hurt by the downturn in the airline industry due to the recession, high fuel prices several years ago and the loss of an international flight. The number of passengers has fallen from a high of 6.7 million in 2004 to 5.3 million last year, a drop of more than 20 percent.

The airport lost its international link last year when Northwest halted service to Amsterdam. But the airport is expected to pick up more domestic flights when Delta Air Lines restores service to Los Angeles next month and Southwest Airlines that began flights to Denver in March.

Martin Seifert, president of Nufern, a manufacturer of fibers and fiber lasers, said the company has been near the airport in East Granby for nearly 10 years. He said he's unsure Nufern will take advantage of the tax breaks because an expansion would have to add very significantly to the business.

But he said an influx of machine shops and other small businesses could boost the area's pool of employees and support the work of high-tech businesses, he said.

"It's huge for us," Seifert said.

Roy A. Williams, who was airport director at Dayton, Ohio, and managed the New Orleans airport, said development zones help draw aviation-related businesses, but not necessarily companies unrelated to the airline industry.

Business owners generally prefer to own buildings, which is usually not possible at airports where business properties are leased, he said. Ownership allows businesses to depreciate buildings, boosting tax benefits and profits, Williams said.

However, Bill Fife, who was chief operating officer at John F. Kennedy International Airport, said development zones are increasingly popular as airports seek to increase revenue from sources other than airlines, which are pressed by taxes, fees and other costs.